Elizabeth Warren, Third Way and the Battle Over American Liberalism

Since Barack Obama’s election, Democrats have been united by an increasingly reactionary oppposition. But beneath that veneer of tranquility, longstanding political and philosophical differences over the role the government should play in our economy continue to divide Clintonian “New Democrats” from those who embrace a more traditional New Deal style of liberalism. Many observers expect that a day of reckoning between these groups is coming as we approach the 2016 elections.

On Tuesday, Chuck Lane echoed Third Way’s argument in The Washington Post, writing, “[d]eeply invested in the individualistic “American dream,” and deeply divided by race, ethnicity and religion, Americans have proven less susceptible to class-based economic appeals than voters in other nations.”

Here’s the real question to raise against Lane’s argument: even if income inequality is not as much of an instant political winner as some liberals would wish it to be, why should Obama and other Democrats therefore play down the issue? Parties need a purpose and identity, and soaring inequality strikes as close to the animating core of the party of the New Deal as any other issue. Obama is talking up inequality not just because he’s grasping for an issue to ride into a midterm election year but because he seems to have genuinely believed for some time now that, as new White House hire John Podesta declared this week and as the Holy Father himself declared two weeks earlier, it is a serious problem with a clear moral dimension. And it is! As Lane himself notes, “the top 10 percent of U.S. earners claimed about half of all before-tax income in 2012, including capital gains.” Another stunning stat that Obama cited in his big speech on inequality last week: “A child born in the top 20 percent has about a 2-in-3 chance of staying at or near the top. A child born into the bottom 20 percent has a less than 1-in-20 shot at making it to the top.” Meanwhile, many economists now conclude that inequality hinders economic growth and may even raise the likelihood of financial crashes like the 2008 collapse.

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